- The supply of WBTC on Ethereum fell by 15%, equivalent to 23,384 tokens, bringing its total supply to 153,16.
- So is this decline indicate a reduction in demand for the asset?
Wrapped Bitcoin (WBTC) has seen a significant decline in its supply on Ethereum in February 2023. The supply of WBTC on Ethereum fell by 15%, equivalent to 23,384 tokens, bringing its total supply to 153,164, according to Dune Analytics data. This represents the lowest level of WBTC supply since March 2021. The decline in WBTC’s supply is due to a high number of burns by Celsius, a bankrupt crypto lender that was a major WBTC holder.
WBTC is an Ethereum-based token that mirrors Bitcoin’s price performance, with a 1:1 peg to the digital asset. WBTC gained popularity during the 2022 bull run when its supply peaked at 285,000, with BTC trading at around $48,000. At present, WBTC’s market cap stands at $3.63 billion, far from its peak of $13.03 billion, according to CryptoSlate’s data.
Celsius Responsible for Major Wrapped BTC Burns
Celsius was responsible for a substantial volume of the burns, having burnt 22,732 Wrapped BTC worth $533 million in just two days through FalconX. The burns by Celsius have been reminiscent of the burns recorded in December 2022 when the crypto market was still recovering from FTX’s collapse. At that time, there were concerns that FTX’s collapse would significantly affect WBTC’s reserves because it was one of the asset’s top merchants.
The burns by Celsius have had a significant impact on WBTC’s supply, leading to a decline of 15% in February. These burns are a result of the lender’s redemption and liquidation process, where Celsius is converting its crypto holdings into cash to pay off its debts. Celsius filed for Chapter 11 bankruptcy in January, citing market volatility and regulatory pressure as the primary reasons for its financial troubles.
Implications of the WBTC Supply Decline
The decline in Wrapped BTC’s supply of Ethereum has implications for the overall crypto market, as it indicates a reduction in demand for the asset. WBTC is one of the most popular ways for investors to gain exposure to Bitcoin without actually holding the digital asset. As such, a decline in WBTC’s supply could indicate a decline in interest in Bitcoin among investors.
Moreover, the decline in WBTC’s supply could have a significant impact on the price of Bitcoin, as WBTC’s price performance mirrors that of the digital asset. With a decline in WBTC’s supply, there may be a corresponding decline in demand for Bitcoin, leading to a drop in its price.
So conclusively, Wrapped Bitcoin’s supply decline in February is a significant development in the crypto market, as it indicates a reduction in demand for the asset. The decline in WBTC’s supply is primarily due to burns by Celsius, a major WBTC holder, and a bankrupt crypto lender. The burns by Celsius have had a significant impact on WBTC’s supply, leading to a decline of 15% in February. This decline could have implications for the overall crypto market, including a decline in interest in Bitcoin among investors and a corresponding drop in its price.